Check out my latest video as I discuss how to understand the current housing supply and inventories, and how it determines current pricing in the twin cities marketplace.

http://www.youtube.com/watch?v=q8886siM5EU

 

STEVE:  Well, today what I’m going to talk about is more graphs, a little bit about supply of real estate, and how it can be broken down.  Whenever I meet with buyers or with sellers, I’m talking to them about what kind of supplies do we have to deal with as they’re making an offer or as the seller is putting their house on the market.  So what you’re going to see on these graphs that I show you here are three different types of graphs.  One page are graphs showing inventory of homes for sale, and it shows four different graphs.  One that shows all the homes for sale, then the traditional homes (those that are not condos or those that are not townhouses).

So you’ll see number one all the homes, then your single family residential.  Then you’ll see your townhomes, and you’ll see your condos.  Then when you move to the next one, you’ll see the exact same thing where it shows all of the properties with their supply, supply of inventory.  So you can see on these graphs how our supply has increased.  So you can see if you have a condo there’s a greater supply of condos in the market than there are single-family residential homes.  And so as a seller, when you’re looking at putting your home on the market and knowing you have a greater supply to compete against, you have to be even more fine tuned in your pricing.

The third thing I’m going to have you looking at in the supply outlook is the area of the home sales in the last 12 months, and it breaks again into those four different categories.  And each one you’ll see that in each one of the categories that the sales have been less over the last 12 months than it was the prior 12 months.  And so as I’m trying to help a person through making their offer, trying to decide what’s the best thing for them to do, you want to look at the specific type of properties in making your comparison.  Now the hardest one that’s probably going to be to look at of graphs is where it shows the buy/sell price. And you’ll see that it’s broken down under 120,000; from 120,000 to 150; 150 to 190; 190 to 250; 250 to 350; 350 to 500; 500 to a million; and a million plus.

But you’ll see in each price bracket there is a different type of supply and a different type of number of units that are selling in the marketplace.  So for instance, if you’re lucky enough to own a million-dollar house, look at the graph and you’ll see that currently there is a supply of 613 properties on the market compared to 692.  But if you go to the next supply outlook, it will show you the current inventory and that in fact even though the inventory has dropped from 39 months, there are now 30 months’ inventory.  I’m sharing that with you just to let you know that in our strongest real estate market, the million-dollar price range used to be about a 12-month inventory, and the average inventory was down around a 4-month inventory.

 

So for us to see a stronger real estate market for sellers, we’re going to have to see our inventories reduced.  These are all interesting graphs, and as I meet with people day to day on their properties, we get into the statistics and let them see how it affects them as they position themselves in the marketplace.  And the same thing with buyers.  As buyers go to look in the marketplace, it’s good for them to know well what is my negotiability going to be because of the inventories that are out there.  You probably heard many, many years ago back in 2004 when the inventories were so low buyers were making multiple offers with houses selling more than asking price.  And in today’s current market conditions, those are not exactly what’s happening. 

 

Well, to end up today, when you get into questions, you can always come into my office.  We’ll put Westy at the end of the table and you can ask him questions, and we’ll determine what the duck has in your best interest.  Thanks for listening today.  Hope you have a great week.  Thanks.

 

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